There’s a fascinating series being written on the Slate website called The United States of Inequality. The first article explains how, statistically, the income gap in the US has grown dramatically over the past 40 years:
It’s generally understood that we live in a time of growing income inequality, but “the ordinary person is not really aware of how big it is,” [Nobel Prize winning economist Paul] Krugman told [the author, Timothy Noah]. During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth—the “seven fat years” and the ” long boom.” Yet from 1980 to 2005, more than 80 percent of total increase in Americans’ income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.
The rest of the series, which will be completed during the coming week, posits a number of theories as to why the income gap is growing. So far, the author has ruled out race and gender and concluded that immigration is only a minor contributor, if at all.
Politics, one would think, has to play a part. But surely the biggest contributor has to be globalisation. The influx of billions of Chinese and Indian workers into the global economy over the past two decades hasn’t done anything to depress the wages of investment bankers, lawyers, doctors and dentists. But it has put enormous pressure on the wages of millions of middle- and low- income Americans, from manufacturers and automobile makers to computer programmers.
Perhaps Noah will cover this over the next few days. Whatever the cause, it’s a sad state of affairs for the vast majority of the US population.